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[Updated October 11, 2015 to reflect changes Internet Retailer made to their 2015 Top 500 database since the date this was first published.]

According to the newest data from the leading trade publication, Internet Retailer, TurnTo Networks Inc. is the fastest-growing user-generated content (UGC) solution provider to the “IR500” – the top 500 online retailers in North America.

Of the top 3 solution providers in Internet Retailer’s “Customer Reviews and Forums” category – TurnTo, Bazaarvoice, and PowerReviews – only TurnTo showed significant growth from the 2014 tally to 2015. The number of top 500 retailers using TurnTo grew by 53% during the period, while the number using Bazaarvoice declined 3% and the number using PowerReviews declined 12%.

Measured by the annual web sales of the retailers served, the results were even more dramatic. TurnTo grew 198% during the period, while Bazaarvoice grew 2% and PowerReviews declined 1%. Additionally, the Internet Retailer 2015 research shows that 50% of the annual web sales of the PowerReviews customer base is represented by a single customer. Excepting this, the total annual web sales of TurnTo’s IR500 customers would be ahead of PowerReviews and second only to Bazaarvoice overall.

I had a quick chat with our CEO, George Eberstadt, to get his thoughts on the reasons for this growth.

Me:  George, the first thing people are going to ask on seeing these numbers is what’s driving them.  So, what’s driving them?

George:  First let me say – and I don’t want to be too saccharine about this – it’s  humbling and gratifying to get this kind of trust from these businesses.  The alternatives have been around a while, so we recognize that the retailers adopting us are making a bold move rather than the safe choice.

And I think that’s the short answer to your question.  The customer-generated content space hasn’t seen much bold innovation for a while, and retailers that are tired of the same-old haven’t had alternatives – especially at the enterprise level. We bring the fresh perspective, smart innovation, and fanatical commitment that a lot of retailers are looking for.

Me:  Can you put your finger on any particular TurnTo innovations that the market has been responding to?

George:  I think it’s a mix – some big, some subtle.  For example, we were the first to introduce the “active outreach” mechanism for getting fast community answers to shopper questions.  That was really the breakthrough that makes community answering work.  Then, we expanded our vision of Q&A to include answering an ever broader range of shopper questions even faster, so we added instant answers and knowledge base features.  Q&A is still a new frontier with lots more opportunities for major innovations, and we’re pursuing those.

Checkout Chatter is another example.  It’s simple and highly effective.  And it’s a TurnTo exclusive.

Ratings & Reviews, on the other had, is a more mature area, so our innovations have been less revolutionary, though they still have a big impact on ROI.  For example, our ready-to-wear UI is exceptionally clean, elegant, and mobile-friendly while still providing easy customizability either through CSS or our comprehensive API.  Our review-solicitation email answer flow automatically authenticates the user, leading to more reviews from verified buyers – especially on mobile devices.  Our transaction history integration enables the system to ask for reviews on previously purchased items immediately after a user writes a review or answers a question, which increases total review volume by 20-30%.

Me: Are there any other reasons you think retailers are switching?

George:  I think our customer success process and the great team behind it is another reason.  By focusing on the business as well as the technical aspects of integrating our tools, we ensure customers get the most value from them.  And we don’t just move on to the next customer as soon as the last one is set up; no one is fully optimized on the day they go live, and we are pretty relentless in follow-through over time.  That’s a hard thing for retailers to get a sense of during an evaluation, but it comes into play in our high customer retention and referral rates, which is a big part of our growth.

Data from the IR500 survey by Internet Retailer are available at www.top500guide.com.

In Internet Retailer’s just-published list of the top vendors to the IR500, TurnTo is #3 in the “Customer Reviews and Forums” category.  OK, we’re still a good deal smaller than the leaders, but there’s a reason their customers are switching to TurnTo.  Give us a call to find out why!

I spent last week at IRCE 2012 in Chicago, and the #1 question I got asked was “what do you think of the acquisition of PowerReviews by Bazaarvoice?”  Now that I have a quiet moment, I thought I’d set down an answer.

For the merging companies: this is a smart move for Bazaarvoice, and while it’s the end of the road for the PowerReviews team and their products as we know them, it’s the best possible outcome for the PowerReviews shareholders.  The $152 million purchase amount, about 13 times PowerReviews 2011 revenues of $11.5m, is a steep price to pay for a unprofitable business that’s a distant second in their segment.  So why did Bazaarvoice pay up?  Because even though Bazaarvoice won most of the larger accounts in the market, PowerReviews was in every deal competing on price.  The downward pressure this put on Bazaarvoice pricing didn’t just kick in on new deals; every time a Bazaarvoice contract came up for renewal, the customer always had the credible threat of switching to PowerReviews to keep a lid on Bazaarvoice prices.  What’s the value to Bazaarvoice of eliminating price competition from PowerReviews?  Here’s a sample calculation.  Bazaarvoice is currently at a $120m revenue run rate.  If they are able to increase their price realization by 20%, that’s another $24m in revenue, with no associated cost – ie it’s all profit.  The present value of an incremental $24m a year in profit, at a nominal 10% discount rate, is $240m, making $155m a tolerable price to pay.  If the PowerReviews business turns out to be worth something, after their team has been shrunk and their prices raised, then that’s all gravy to Bazaarvoice.  So that’s what you call a win-win, right?

Well, not if you are a customer.  If you are already a Bazaarvoice customer, the effects will be straightforward enough: when your contract comes up for renewal, expect to pay what you’re quoted.  Your alternatives just got a lot narrower.

If you are a PowerReviews customer, it’s a bit more complicated.  Yes, you should expect to pay more when you renew.  But you should also be thinking about what this means to the support your product is going to be getting over time.  Here’s my bet on what’s going to happen.  Bazaarvoice will keep the PowerReviews Express product.  It won’t get a lot of new investment, but it wasn’t before either, since PowerReviews has been focused on their enterprise offering the last few years.  It costs little to sell and service this offering, so there’s no need for Bazaarvoice to cut back to maintain the business.  On the other hand, Bazaarvoice is likely to cut back heavily on investment in the PowerReviews Enterprise product.  This is the offering that’s driving the PowerReviews sales, marketing, and R&D costs, and it competes directly with the Bazaarvoice product line.  It’s hard to see Bazaarvoice carrying the R&D cost of two overlapping products or training their soon-to-be-integrated sales team to sell both.  On the other hand, they won’t want to alienate their newly acquired customers by forcing a rapid change-over.  So I expect they’ll keep the PowerReviews Enterprise product around with minimal investment, and they’ll convert the stores using it over to the Bazaarvoice platform little by little as the PowerReviews platform falls further and further behind.  For those who use the core PowerReviews reviews product, no immediate action will be needed, since that’s already a mature, full-featured platform.  But for those using or considering the new tools in PowerReviews’ recently-announced “Essential Social Suite” – analytics, loyalty, social sharing, Q&A – the picture is different.  All of these new tools are raw, and some are explicitly still in Beta.  Without the significant R&D investment needed to bring these products quickly from their current state to even a modest level of maturity, adopting them may cause real pain.

[For a downloadable version of this study, click here.]

To date, Q&A on ecommerce sites has been primarily a tag-along application to customer reviews (provided by vendors that specialize in customer reviews). This approach results in a Q&A model that’s more like customer reviews than a true social experience between shoppers and customers, missing the benefits that a truly social approach to ecommerce Q&A provides.

The key to Social Q&A is that shopper questions should reliably and quickly get answered by real customers, and participants should have the ability to go back-and-forth beyond the initial question, if they choose to. If shopper questions receive customer answers only rarely or after an extended period, the shopper is disappointed and the store has missed the chance to provide a fast reminder to the shopper about the purchase she was considering. Further, getting past customers to share their experience with real shoppers is a great way for stores to keep their relationships with the customer base fresh. The rise of social networks has conditioned people to expect a high level of interactivity from social applications – so if a Q&A tool isn’t providing that, it’s not really Social.

On many online stores’ Q&A systems, we’ve observed that most answers come from store staff.  That can be an OK supplement to social answers (especially if the staff are really experts), but the store may be better off directing those questions to a live chat or phone line so the staff can interact with the shopper in real time.  And if a shopper wants to know something subjective – like how the product held up after 3 months, or how it felt, or just if it’s really as fabulous as they hope it is(!) – they may only want an answer from someone like them who really bought the item.  A Q&A system that relies heavily on staff answers also isn’t really Social.

That’s why TurnTo created an approach to Q&A for ecommerce that reliably provides a true Social experience – multiple, fast answers from real purchasers with continuing back-and-forth dialog. To measure the difference between the TurnTo approach and that provided by the leading customer reviews vendors, Bazaarvoice and PowerReviews, we conducted a simple test. We asked 16 shopper questions on a range of sites with Q&A powered by TurnTo and these other vendors, and we tracked how long it took for the answers to arrive.  Here are the aggregated results:

Methodology:  In our test design, we tried to keep the playing field level. We asked general questions that could easily be answered by anyone with experience with the product. We tried to ask the identical question about identical products wherever possible. Where not possible we tried to pick featured items on the Bazaarvoice and PowerReviews sites likely to have high traffic and have been purchased many times (no new arrivals items were used). We tried to pick sites where the Bazaarvoice and PowerReviews Q&A tools were implemented in a highly visible way on the page. That meant that the PowerReviews and Bazaarvoice sites were not always the largest in each vertical (in particular, in the photo gear category), but more often than not, the Bazaarvoice and PowerReviews sites had far more traffic than the TurnTo sites, and they did so in aggregate. We checked the item page where each question was asked at exactly the specified intervals and counted posted answers. We also provided our email address with each question asked and counted answers received by email.  (The Bazaarvoice and PowerReviews stores often emailed answers well before those answers appeared on the sites, in some cases even before the questions appeared on the sites.)  None of the sites were alerted in any way about this test. All questions were submitted on Wednesday, August 10, 2011 between 9am and 11am eastern time.  Here were the test sites that we used:

On each site, we asked 4 questions.  So in total, we asked 16 questions per vendor.  Here are the details of the answers received, by individual site.  (All numbers are for social answers – answers from customers – except those in parentheses, which are answers from store staff.)

Staff answers:  We also tracked answers from store staff.  These are shown in parentheses in the table above.  At the end of the two week test period, the questions on PowerReviews sites received a total of 10 staff answers vs 7 social answers.  The questions on Bazaarvoice sites received a total of 5 staff answers vs 9 social answers.  No staff answers were received on the TurnTo sites – note that 15 out of 16 questions on TurnTo sites received at least 1 social answer within 24 hours.

We encourage you to try this test for yourself.

The raw data:  Here are the urls for all the item pages for all questions in the test.  The asker is “Andrew P”, “Andrew RP” or “Anonymous” – also look for a submit date of August 10th where that is shown.  Note that on the Bazaarvoice and PowerReviews sites, we counted answers received by email, even though some of those answers – in some cases, even the questions – were not posted on the site by the end of the test period.

SunnySports (TurnTo)
http://www.sunnysports.com/Prod/HSRAP.html
http://www.sunnysports.com/Prod/ERKTS.html
http://www.sunnysports.com/Prod/NFCVJWN.html
http://www.sunnysports.com/Prod/TMBCHTM.html

GoJane (TurnTo)
http://www.gojane.com/54695-stuff-pleated-twist-front-clutch.html
http://www.gojane.com/55317-stuff-floral-print-wayfarer-sunglasses.html
http://www.gojane.com/52138-shoes-patent-platform-pump.html
http://www.gojane.com/45392-shoes-mid-rise-combat-boot.html

KitchenwareDirect (TurnTo)
http://www.kitchenwaredirect.com.au/The-5-in-1-Multi-Cooker-5L
http://www.kitchenwaredirect.com.au/Global-Ikasu-7pc-Knife-Block-Set
http://www.kitchenwaredirect.com.au/Red-Pizza-Maker
http://www.kitchenwaredirect.com.au/Scanpan-Classic-Covered-Chef-Pan-32cm

Adorama (TurnTo)
http://www.adorama.com/INKD7000.html
http://www.adorama.com/CA702002ISU.html
http://www.adorama.com/GBSLBK.html
http://www.adorama.com/IDS8GBUC215.html

Sierra Trading Post (PowerReviews)
http://www.sierratradingpost.com/high-sierra-us-snowboarding-team-backpack~p~3901j/
http://www.sierratradingpost.com/marmot-titan-backpacking-tent-2-person-3-season~p~88182/
http://www.sierratradingpost.com/marmot-precip-jacket-waterproof-for-women~p~2283c/
http://www.sierratradingpost.com/asolo-fsn-95-gore-tex-hiking-boots-waterproof-for-men~p~72552/

Johnston & Murphy (PowerReviews)
http://www.johnstonmurphy.com/product.aspx?pid=80786
http://www.johnstonmurphy.com/product.aspx?pid=72913
http://www.johnstonmurphy.com/product.aspx?pid=80374
http://www.johnstonmurphy.com/product.aspx?pid=75845

Hayneedle (PowerReviews)
http://www.hayneedle.com/sale/fagorelectricallinonemulticooker.cfm
http://www.hayneedle.com/sale/calphalonkatanacutlery14pieceknifeset.cfm
http://www.hayneedle.com/sale/presto03430pizzazzpizzamakeroven.cfm
http://www.hayneedle.com/sale/rachaelrayhardanodized10piececookwareset.cfm

Abes of Maine (PowerReviews)
http://www.abesofmaine.com/item.do?item=NKD7000
http://www.abesofmaine.com/item.do?item=CN7020028ISII
http://www.abesofmaine.com/item.do?item=NKCFDC1
http://www.abesofmaine.com/item.do?item=SDCF8GBXA61

Bass Pro Shop (Bazaarvoice)
http://www.basspro.com/Badlands-Diablo-Day-Pack-Backpacks/product/102015/-1507491
http://www.basspro.com/Eureka!-Solitaire-Tent/product/58274/90919
http://www.basspro.com/The-North-Face-Venture-Jacket-for-Ladies/product/10224821/134865
http://www.basspro.com/RedHead%C2%AE-Everest-Hikers-for-Men/product/19193/115209

Bluefly (Bazaarvoice)
http://www.bluefly.com/Rebecca-Minkoff-fire-engine-leather-Beloved-Mini-crossbody-bag/cat20428/315738502/detail.fly
http://www.bluefly.com/Betsey-Johnson-black-contrast-stem-wayfarer-sunglasses/cat60024/314050001/detail.fly
http://www.bluefly.com/Pour-la-Victoire-aqua-patent-leather-Irina-platform-pumps/cat20458/314292102/detail.fly
http://www.bluefly.com/Ash-black-leather-Remix-studded-tall-boots/cat20448/312714301/detail.fly

Walmart (Bazaarvoice)
http://www.walmart.com/ip/Hamilton-Beach-6-Quart-Stay-or-Go-Slow-Cooker-33162/4012120
http://www.walmart.com/ip/Ginsu-14-Piece-Stainless-Cutlery-Set/7942211
http://www.walmart.com/ip/Presto-Pizza-Oven/3218
http://www.walmart.com/ip/Stansport-13-Cast-Iron-Fry-Pan/16349862

Cameras Direct (Bazaarvoice)
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_19502
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_10620
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_11838
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_11588

Bazaarvoice is a registered trademark of Bazaarvoice, Inc.PowerReviews is a registered trademark of PowerReviews, Inc.